– Earnings Per Share Increases 42% to $.64
before Charges –
– Company Raises Full-Year EPS Estimates
–
The Estée Lauder Companies Inc. (NYSE:EL) today reported net
sales for its third quarter ended March 31, 2014 of $2.55 billion,
an 11% increase compared with $2.29 billion in the prior-year
quarter. Excluding the impact of foreign currency translation, net
sales increased 12%. The Company reported a 270 basis-point
increase in operating margin, and net earnings for the quarter rose
19% to $213.2 million, compared with $178.8 million last year.
Diluted net earnings per common share rose 20% to $.54, compared
with $.45 reported in the prior year.
Fabrizio Freda, President and Chief Executive Officer, said,
“Our excellent results this quarter reflect our multiple engines of
growth across product categories, countries and channels, enabling
us to achieve strong local currency sales growth in every
geographic region. Sales came in higher than our expectations and
we again exceeded our earnings per share forecast. These results
were driven by the broad global demand for our diverse prestige
beauty brands, the strength of our emerging markets, accelerated
growth in certain developed markets and solid progress in skin
care.”
During the quarter, the Venezuelan government enacted changes to
its foreign currency exchange rate regulations, which expanded the
use of its existing exchange rate mechanisms and created another
mechanism, SICAD II. Based on these changes, the Company evaluated
all rate mechanisms made available by the Venezuelan government to
determine the most appropriate rate to use. As a result, the
Company changed the exchange rate used to remeasure its Venezuelan
net monetary assets to a newly enacted SICAD II rate. Accordingly,
the Company recorded a remeasurement charge of $38.3 million, both
before and after tax, equal to approximately $.10 per diluted
share.
Excluding charges, principally related to the Venezuela
remeasurement, net earnings for the three months ended March 31,
2014 were $251.7 million, and diluted net earnings per common share
were $.64, versus $.45 in the prior-year period.
Additionally, comparisons between the current and prior year
third quarters were affected by the acceleration of $94 million in
sales shifted into the Company’s fiscal 2013 second quarter in
advance of the January 2013 implementation of SAP as part of its
Strategic Modernization Initiative (SMI). This amounted to
approximately $78 million in operating income, equal to
approximately $.13 per diluted common share.
Excluding the impact of the shift, the Venezuela remeasurement
charge and restructuring activities, net sales in local currency
and operating income for the three months ended March 31, 2014
would have increased 8% and 18%, respectively. A reconciliation
between GAAP and non-GAAP financial measures is included in this
release.
“Our outlook for the balance of the year remains positive and we
expect to achieve our financial objectives,” Mr. Freda said. “We
continue to forecast local currency sales growth of 6% to 7%, and
we are raising our earnings per share guidance to $2.86 to $2.90,
before charges and the effect of potential accelerated sales orders
relating to our SMI go-live in July 2014. Driving this performance
will be new and recent product offerings across categories,
particularly in skin care and makeup. For the remainder of the
fiscal year we also expect our growth will continue to be fueled by
our success in high-growth channels and emerging markets, while
enhancing our local relevance. Importantly, our mid-size brands
continue to grow faster than the average, increasing their
contribution to the Company’s sales and profitability, while
strengthening our portfolio. We are flexible in our investment
spending, targeting opportunities that provide the highest returns,
promote demand for our brands and foster global growth. At the same
time, we are improving operating leverage and eliminating non-value
added costs to further improve operating margins and
profitability.”
Results by
Product Category
Three Months Ended March 31
(Unaudited; Dollars in millions) Net Sales
Percent Change
OperatingIncome (Loss)
PercentChange
2014 2013
ReportedBasis
LocalCurrency
2014 2013
ReportedBasis
Skin Care $ 1,132.1 $ 1,015.0 12 % 13 % $ 179.0 $ 134.4 33 %
Makeup 1,015.7 919.2 10 11 149.9 107.3 40 Fragrance 270.5 233.2 16
16 (1.9 ) (0.2 ) (100 )+ Hair Care 120.8 116.2 4 5 13.2 5.1 100 +
Other 10.7 8.2 30 32 1.6 (3.2 ) 100 + Subtotal 2,549.8 2,291.8 11
12 341.8 243.4 40
Returns and charges associated
with restructuring activities
— — (0.2 ) 1.7 Total $ 2,549.8 $ 2,291.8 11 % 12 % $ 341.6 $ 245.1
39 %
The change in net sales and operating income for the quarter was
favorably impacted by the prior year shift in orders from certain
retailers, due to the Company’s implementation of SAP, as
previously mentioned, in the following product categories:
- Net sales: Skin care, approximately $48
million; makeup, approximately $32 million; fragrance,
approximately $10 million; and hair care, approximately $4
million.
- Operating income: Skin care,
approximately $40 million; makeup, approximately $26 million;
fragrance, approximately $9 million; and hair care, approximately
$3 million.
Excluding the impact of the shift in
orders:
- Reported net sales in skin care,
makeup, fragrance and hair care would have increased 7%, 7%, 11%
and 1%, respectively.
- Operating results in skin care, makeup,
fragrance and hair care would have increased/(decreased) 3%, 12%,
(100)+% and 63%, respectively.
The current-year period remeasurement of net monetary assets in
Venezuela, as previously mentioned, primarily impacted the
operating income of the skin care, makeup and fragrance product
categories by $12 million, $16 million and $10 million,
respectively.
Skin Care
- The skin care category is a strategic
priority and the Company is well positioned to capitalize on its
strong pipeline of innovative products. The Company gained share
during the quarter in this category in certain countries where its
products are sold.
- Sales reflect the recent launches of
the Company’s new Advanced Night Repair Synchronized Recovery
Complex II and Micro Essence Skin Activating Treatment Lotion from
Estée Lauder and Dramatically Different Moisturizing Lotion + and
Even Better Essence Lotion from Clinique.
- Sales from the reformulated Repairwear
Laser Focus by Clinique and continued strong growth from the
Company’s luxury skin care brand, La Mer, also contributed to
growth.
- Operating income increased sharply,
including the shift, primarily reflecting higher-margin product
launches from certain of the Company’s heritage brands, as well as
increased results from higher-end prestige skin care products.
Makeup
- Higher makeup sales primarily reflected
strong growth from the Company’s makeup artist brands and from
recent launches, such as Pure Color Envy Sculpting Lipstick from
Estée Lauder and All About Shadow from Clinique.
- Sales from makeup artist brands
benefited from new product offerings, as well as expanded
distribution in line with the Company’s retail store strategy.
- Increased sales from Smashbox and the
Tom Ford line of cosmetics contributed to the category’s
growth.
- The increase in makeup operating income
primarily reflected improved performance from the Company’s makeup
artist brands due to the higher sales, and certain heritage
brands.
Fragrance
- In fragrance, strong sales growth came
from luxury brands Tom Ford and Jo Malone. Sales gains were also
generated from the recent launches of Estée Lauder Modern Muse,
Tory Burch and the Michael Kors Fragrance Collection.
- Fragrance operating loss increased, due
to the Venezuela remeasurement charge. Operating results also
reflected higher net sales from recent launches, partially offset
by higher investment spending.
Hair Care
- Hair care net sales growth was
primarily driven by Aveda, reflecting gains in the salon channel
and the continued success of its Dry Remedy and Damage Remedy
franchises.
- Sales increased at Bumble and bumble,
primarily due to higher sales to specialty-multi brand retailers.
Ojon sales decreased, primarily due to its exit from the direct
response television channel.
- The category growth also benefited from
expanded global distribution, in particular to specialty-multi
brand retailers for Bumble and bumble and to salons and travel
retail for Aveda.
- Hair care operating income increased
more than 100%, primarily reflecting higher net sales driven by
expanded global distribution and new product launches, as well as
lower investment spending.
Results by
Geographic Region
Three Months Ended March 31
(Unaudited; Dollars in millions) Net Sales
Percent Change
OperatingIncome (Loss)
PercentChange
2014 2013
ReportedBasis
LocalCurrency
2014 2013
ReportedBasis
The Americas $ 1,072.0 $ 988.1 8 % 10 % $ 111.5 $ 68.0 64 %
Europe, the Middle East & Africa. 959.4 847.9 13 12 160.2 137.5
17 Asia/Pacific 518.4 455.8 14 18 70.1 37.9 85 Subtotal 2,549.8
2,291.8 11 12 341.8 243.4 40
Returns and charges associated
with restructuring activities
— — (0.2 ) 1.7 Total $ 2,549.8 $ 2,291.8 11 % 12 % $ 341.6 $ 245.1
39 %
In the quarter, the change in net sales and operating income in
the Company’s geographic regions was favorably impacted by the
prior year shift in orders from certain retailers as previously
mentioned, as follows:
- Net sales: the Americas, approximately
$29 million; Europe, the Middle East & Africa, approximately
$15 million; and Asia/Pacific, approximately $50 million.
- Operating income: the Americas,
approximately $23 million; Europe, the Middle East & Africa,
approximately $12 million; and Asia/Pacific, approximately $43
million.
Excluding the impact of the shift in
orders:
- Reported net sales in the Americas,
Europe, the Middle East & Africa and Asia/Pacific would have
increased 5%, 11% and 2%, respectively.
- Operating income in the Americas,
Europe, the Middle East & Africa and Asia/Pacific would have
increased/(decreased) 22%, 7% and (13)%, respectively.
The Americas
- Net sales in the United States
increased, reflecting growth from the Company’s makeup artist and
luxury brands and certain heritage brands. Sales also increased in
Latin America and Canada.
- Sales of the Company’s online business
grew double digits.
- Operating income in the Americas rose,
reflecting the increased sales and a more measured approach to
spending. Additionally, operating income in the region reflects the
charge of $38.3 million in the current-year period to remeasure net
monetary assets in Venezuela.
Europe, the Middle East &
Africa
- In constant currency, net sales
increased in each major product category and in virtually all
countries in the region. The Company estimates that it continued to
outperform prestige beauty in many markets.
- The net sales increase was led by
double-digit growth in a number of areas, including the United
Kingdom, Germany, Switzerland, Turkey, France and Russia. Net sales
growth in Switzerland and France were due, in part, to the
accelerated retailer orders, as previously discussed. Certain
European countries continued to experience soft retail
environments.
- In travel retail, sales increased
high-single digits, primarily reflecting higher sales from the
Company’s luxury brands, an increase in global airline passenger
traffic and expanded distribution.
- Operating income increased, as higher
results from the United Kingdom, Switzerland, France and Russia
were partially offset by lower operating results in Spain and
certain Eastern European countries.
Asia/Pacific
- Constant currency net sales increased
in the majority of countries in the region. The strongest growth
was generated in China, Japan, Hong Kong, Taiwan and Australia. The
sales increase in China, Hong Kong and Taiwan reflect the shift in
retailer orders, as previously discussed.
- Sales were lower in Thailand, Korea and
the Philippines.
- The Company estimates that it gained
share in certain countries within its points of distribution during
the quarter.
- In Asia/Pacific, operating income
increased, led by China, Japan, Korea and Taiwan. Results in China
and Taiwan primarily reflect the impact from the accelerated
retailer orders. Lower operating results were posted in Hong Kong
and the Philippines.
Nine-Month Results
- For the nine months ended March 31,
2014, the Company reported net sales of $8.24 billion, a 6%
increase from $7.77 billion in the comparable prior-year period.
Excluding the impact of foreign currency translation, net sales
increased 7%. Net sales grew in each of the Company’s geographic
regions and product categories.
- The Company reported net earnings of
$946.4 million for the nine months ended March 31, 2014, a 2%
increase compared with $925.8 million in the same period last year.
Diluted net earnings per common share for the nine months ended
March 31, 2014 increased 2% to $2.40, compared with $2.35 reported
in the prior-year period.
- The fiscal 2014 nine-month results
included the remeasurement charge of $38.3 million related to
Venezuela, as previously mentioned.
- The fiscal 2013 nine-month results
included charges associated with restructuring activities of $13.3
million ($8.9 million after tax), equal to $.02 per diluted common
share. Additionally, during the nine months ended March 31, 2013,
the Company recorded a pre-tax charge of $19.1 million ($12.2
million after tax), for the extinguishment of debt, equal to $.03
per diluted common share.
- Excluding these charges, net earnings
for the nine months ended March 31, 2014 rose 4% to $983.5 million
and diluted net earnings per common share increased 4% to $2.50,
versus a comparable $2.40 in the prior-year period.
Cash Flows
- For the nine months ended March 31,
2014, net cash flows provided by operating activities increased 25%
to $1,169.4 million, compared with $934.2 million in the prior-year
period.
- The increase primarily reflected the
higher net earnings and a net increase in cash from certain working
capital components.
Outlook for Fiscal 2014 Full
Year
The Company expects global prestige beauty to grow approximately
3% to 4%, tempered by continued softness in certain European
countries and Korea, and slower near-term growth in China and the
United States. The Company expects to further improve its gross and
operating margins by leveraging its strong sales growth and
continuing to reduce non-value-added costs.
- Net sales are forecasted to grow
between 6% and 7% in constant currency.
- Foreign currency translation is
expected to negatively impact sales by approximately 1% versus the
prior-year period.
- Diluted net earnings per common share,
including the charge related to the Venezuela remeasurement and the
effect of potential accelerated retailer orders, are projected
between $2.90 to $2.97.
- As mentioned previously in this press
release, the impact of the Venezuela remeasurement is equal to $.10
per diluted common share.
- Diluted net earnings per share, before
the charge related to the Venezuela remeasurement and the effect of
potential accelerated retailer orders, are projected between $2.86
to $2.90. The approximately 1% negative currency impact on the
sales growth equates to about $.02 of earnings per share.
- July 2014 SMI
Implementation:The Company expects to roll out the last
major wave of SMI in July 2014 in certain of its locations. In
advance of this implementation, the Company expects some retailers
will accelerate sales orders that would normally occur in its
fiscal 2015 first quarter into the fiscal 2014 fourth quarter to
provide adequate safety stock to mitigate any potential short-term
business interruption associated with the SMI rollout. Those
additional orders are estimated to amount to between $125 million
and $150 million of sales, equal to $.14 to $.17 per diluted common
share.
Reconciliation between GAAP and non-GAAP estimates
Net Sales Growth (Unaudited)
ReportedBasis
ConstantCurrency
Diluted Earnings Per
Share
Full-year forecast including the
Venezuela
charge and fiscal 2015 accelerated
retailer orders
6% – 7% (1) 7% – 8% $2.90 – $2.97 (1)
Non-GAAP
Venezuela charge — — .10 Full-year forecast excluding the
Venezuela charge
6% – 7% 7% – 8% 3.00 – 3.07 Impact of fiscal 2015
accelerated orders ~(1)% ~(1)% (.14 – .17 )
Full-year forecast excluding the
Venezuelacharge and accelerated retailer orders
5% – 6% 6% – 7% $2.86 – $2.90
(1) Represents GAAP estimates.
Conference Call
The Estée Lauder Companies will host a conference call at 9:30
a.m. (ET) today, May 2, 2014 to discuss its results. The dial-in
number for the call is 888-294-4716 in the U.S. or 706-902-0101
internationally (conference ID number: 30824577). The call will
also be webcast live at http://investors.elcompanies.com.
Forward-Looking
Statements
The forward-looking statements in this press release, including
those containing words like “expect,” “plans,” “may,” “could,”
“anticipate,” “estimate,” “projected,” “forecasted,” those in Mr.
Freda’s remarks and those in the “Outlook for Fiscal 2014 Full
Year” section involve risks and uncertainties. Factors that could
cause actual results to differ materially from those
forward-looking statements include the following:
(1) increased competitive activity from companies in the
skin care, makeup, fragrance and hair care businesses, some of
which have greater resources than the Company does; (2) the
Company’s ability to develop, produce and market new products on
which future operating results may depend and to successfully
address challenges in the Company’s business; (3) consolidations,
restructurings, bankruptcies and reorganizations in the retail
industry causing a decrease in the number of stores that sell the
Company’s products, an increase in the ownership concentration
within the retail industry, ownership of retailers by the Company’s
competitors or ownership of competitors by the Company’s customers
that are retailers and our inability to collect receivables; (4)
destocking and tighter working capital management by retailers; (5)
the success, or changes in timing or scope, of new product launches
and the success, or changes in the timing or the scope, of
advertising, sampling and merchandising programs; (6) shifts in the
preferences of consumers as to where and how they shop for the
types of products and services the Company sells; (7) social,
political and economic risks to the Company’s foreign or domestic
manufacturing, distribution and retail operations, including
changes in foreign investment and trade policies and regulations of
the host countries and of the United States; (8) changes in the
laws, regulations and policies (including the interpretations and
enforcement thereof) that affect, or will affect, the Company’s
business, including those relating to its products or distribution
networks, changes in accounting standards, tax laws and
regulations, environmental or climate change laws, regulations or
accords, trade rules and customs regulations, and the outcome and
expense of legal or regulatory proceedings, and any action the
Company may take as a result; (9) foreign currency fluctuations
affecting the Company’s results of operations and the value of its
foreign assets, the relative prices at which the Company and its
foreign competitors sell products in the same markets and the
Company’s operating and manufacturing costs outside of the United
States; (10) changes in global or local conditions, including those
due to the volatility in the global credit and equity markets,
natural or man-made disasters, real or perceived epidemics, or
energy costs, that could affect consumer purchasing, the
willingness or ability of consumers to travel and/or purchase the
Company’s products while traveling, the financial strength of the
Company’s customers, suppliers or other contract counterparties,
the Company’s operations, the cost and availability of capital
which the Company may need for new equipment, facilities or
acquisitions, the returns that the Company is able to generate on
its pension assets and the resulting impact on its funding
obligations, the cost and availability of raw materials and the
assumptions underlying the Company’s critical accounting estimates;
(11) shipment delays, commodity pricing, depletion of inventory and
increased production costs resulting from disruptions of operations
at any of the facilities that manufacture nearly all of the
Company’s supply of a particular type of product (i.e., focus
factories) or at the Company’s distribution or inventory centers,
including disruptions that may be caused by the implementation of
SAP as part of the Company’s Strategic Modernization Initiative or
by restructurings; (12) real estate rates and availability, which
may affect the Company’s ability to increase or maintain the number
of retail locations at which the Company sells its products and the
costs associated with the Company’s other facilities; (13) changes
in product mix to products which are less profitable; (14) the
Company’s ability to acquire, develop or implement new information
and distribution technologies and initiatives on a timely basis and
within the Company’s cost estimates and the Company’s ability to
maintain continuous operations of such systems and the security of
data and other information that may be stored in such systems or
other systems or media; (15) the Company’s ability to capitalize on
opportunities for improved efficiency, such as publicly-announced
strategies and restructuring and cost-savings initiatives, and to
integrate acquired businesses and realize value therefrom; (16)
consequences attributable to local or international conflicts
around the world, as well as from any terrorist action, retaliation
and the threat of further action or retaliation; (17) the timing
and impact of acquisitions and divestitures, which depend on
willing sellers and buyers, respectively; and (18) additional
factors as described in the Company’s filings with the Securities
and Exchange Commission, including its Annual Report on Form 10-K
for the fiscal year ended June 30, 2013.
The Company assumes no responsibility to
update forward-looking statements made herein or otherwise.
The Estée Lauder Companies Inc. is one of the world’s leading
manufacturers and marketers of quality skin care, makeup, fragrance
and hair care products. The Company’s products are sold in over 150
countries and territories under the following brand names: Estée
Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins,
M•A•C, Bobbi Brown, Tommy Hilfiger, Kiton, La Mer, Donna Karan,
Aveda, Jo Malone, Bumble and bumble, Darphin, Michael Kors,
American Beauty, Flirt!, GoodSkin Labs, Grassroots Research Labs,
Tom Ford, Coach, Ojon, Smashbox, Ermenegildo Zegna, Aerin Beauty,
Osiao, Marni and Tory Burch.
An electronic version of this release can be found at the
Company’s website, www.elcompanies.com.
THE ESTÉE LAUDER COMPANIES
INC.CONSOLIDATED STATEMENTS OF EARNINGS(Unaudited; In
millions, except per share data and percentages)
Three Months EndedMarch
31
PercentChange
Nine Months EndedMarch
31
PercentChange
2014
2013
2014
2013
Net Sales
$
2,549.8
$ 2,291.8 11 % $ 8,243.5 $ 7,774.3 6 % Cost of Sales 498.7
443.1 1,624.4 1,550.3
Gross Profit
2,051.1 1,848.7 11 % 6,619.1 6,224.0 6
%
Gross Margin 80.4 % 80.7 % 80.3 % 80.1 %
Operating expenses: Selling, general and administrative (A) 1,709.5
1,605.3 5,173.9 4,831.8 Restructuring and other charges (B)
— (1.7 ) (2.2 ) 12.0 1,709.5
1,603.6 7 % 5,171.7 4,843.8 7 %
Operating
Expense Margin 67.0 % 70.0 % 62.7 % 62.3 %
Operating
Income 341.6 245.1 39 % 1,447.4 1,380.2 5 %
Operating
Income Margin 13.4 % 10.7 % 17.6 % 17.8 % Interest
expense, net 12.3 12.6 38.2 41.8 Interest expense on debt
extinguishment (C) — — — 19.1 Other income (D) — —
— 23.1
Earnings before Income Taxes 329.3
232.5 42 % 1,409.2 1,342.4 5 % Provision for income taxes
115.6 53.6 458.5 414.5
Net
Earnings 213.7 178.9 19 % 950.7 927.9 2 % Net earnings
attributable to noncontrolling interests (0.5 ) (0.1
) (4.3 ) (2.1 )
Net Earnings Attributable to The Estée
Lauder
Companies Inc.
$ 213.2 $ 178.8
19
% $ 946.4 $ 925.8 2 %
Net earnings attributable to The Estée
Lauder Companies
Inc. per common share:
Basic $ .55 $ .46 20 % $ 2.44 $ 2.39 2 % Diluted .54 .45 20 % 2.40
2.35 2 % Weighted average common shares outstanding: Basic
385.8 387.2 387.3 387.5 Diluted 392.1 394.0 394.1 394.7 (A)
During the quarter, based on recent changes to Venezuela’s foreign
currency exchange rate regulations, the Company changed the
exchange rate used to remeasure its Venezuelan net monetary assets
to a newly enacted SICAD II rate. Accordingly, the Company recorded
a remeasurement charge of $38.3 million, both before and after tax,
equal to approximately $.10 per diluted common share. (B)
During the second quarter of fiscal 2013, the Company closed its
multi-faceted cost savings program implemented in February 2009
(the “Program”) and will continue to execute all remaining
initiatives through fiscal 2014. The impact of returns, charges and
adjustments related to the Program for each fiscal period are set
forth in tables that follow these notes. (C) In the first
quarter of fiscal 2013, the Company redeemed $230.1 million
principal amount of its 7.75% Senior Notes due November 1, 2013. As
a result, the Company recorded a pre-tax charge of $19.1 million
($12.2 million after tax), for the impact of the extinguishment of
debt, equal to $.03 per diluted common share. (D) In
December 2012, the Company amended the agreement related to the
August 2007 sale of Rodan + Fields to receive a fixed amount in
lieu of future contingent consideration and other rights. As a
result of the amended agreement, the Company recognized $23.1
million, equal to $.04 per diluted common share as other income in
the consolidated statement of earnings for the nine months ended
March 31, 2013.
THE ESTÉE LAUDER COMPANIES
INC.SUMMARY OF CONSOLIDATED RESULTS(Unaudited;
Dollars in millions)
Nine Months Ended March 31
Net Sales
Percent Change
OperatingIncome (Loss)
PercentChange
2014
2013
ReportedBasis
LocalCurrency
2014
2013
ReportedBasis
Results by
Geographic Region
The Americas
$ 3,469.0
$ 3,310.4
5
%
6
%
$ 419.7
$ 372.4
13
%
Europe, the Middle East & Africa
3,031.6
2,778.1
9
8
673.4
659.0
2
Asia/Pacific
1,742.8
1,685.9
3
7
352.2
362.1
(3
)
Subtotal
$8,243.4
$7,774.4
6
7
$1,445.3
$1,393.5
4
Returns and charges associated
with restructuring activities
0.1
(0.1
)
2.1
(13.3
)
Total
$ 8,243.5
$ 7,774.3
6
%
7
%
$ 1,447.4
$ 1,380.2
5
%
Results by
Product Category
Skin Care $ 3,564.4 $ 3,408.4 5 % 6 % $ 758.6 $ 750.1
1 % Makeup 3,145.8 2,928.9 7 8 564.5 495.1 14 Fragrance 1,115.7
1,039.6 7 8 95.5 130.5 (27 ) Hair Care 380.7 362.0 5 6 29.3 25.9 13
Other 36.8 35.5 4 5 (2.6 ) (8.1 ) 68 Subtotal 8,243.4 7,774.4 6 7
1,445.3 1,393.5 4
Returns and charges associated
with restructuring activities
0.1 (0.1 ) 2.1 (13.3 ) Total $ 8,243.5 $ 7,774.3 6 % 7 % $ 1,447.4
$ 1,380.2 5 %
______________
This earnings release includes some non-GAAP financial measures
relating to charges associated with restructuring activities, the
Venezuela remeasurement, the extinguishment of debt and the
accelerated orders associated with the Company’s SMI rollout. The
following are reconciliations between the non-GAAP financial
measures and the most directly comparable GAAP measures for certain
consolidated statements of earnings accounts before and after the
charges associated with restructuring activities, the Venezuela
remeasurement, the extinguishment of debt and the accelerated
orders. The Company uses these non-GAAP financial measures, among
other things, to evaluate its operating performance and the
measures represent the manner in which the Company conducts and
views its business. Management believes that excluding these items
that are not comparable from period to period helps investors and
others compare operating performance between two periods. While the
Company considers the non-GAAP measures useful in analyzing its
results, they are not intended to replace, or act as a substitute
for, any presentation included in the consolidated financial
statements prepared in conformity with GAAP.
The Company operates on a global basis, with
the majority of its net sales generated outside the United States.
Accordingly, fluctuations in foreign currency exchange rates can
affect the Company’s results of operations. Therefore, the Company
presents certain net sales information excluding the effect of
foreign currency rate fluctuations to provide a framework for
assessing the performance of its underlying business outside the
United States. Constant currency information compares results
between periods as if exchange rates had remained constant
period-over-period. The Company calculates constant currency
information by translating current-period results using prior-year
period weighted average foreign currency exchange rates.
THE ESTÉE LAUDER COMPANIES
INC.Reconciliation of Certain Consolidated Statements of
Earnings Accounts Before and After Returns and
Charges(Unaudited; In millions, except per share data and
percentages)
Three Months Ended March 31,
2014
Three Months Ended March 31,
2013
As
Reported
Returns/Charges
BeforeReturns/Charges
As
Reported
Returns/Charges
BeforeReturns/Charges
% Changeversus PriorYear
BeforeReturns/Charges
Net Sales $2,549.8 $ 0.0 $2,549.8 $2,291.8 $ 0.0
$2,291.8 11 % Cost of sales 498.7 (0.2 ) 498.5 443.1 0.0 443.1
Gross Profit 2,051.1 0.2 2,051.3 1,848.7 0.0 1,848.7 11 %
Gross Margin 80.4 % 80.4 % 80.7 % 80.7 % Operating expenses
1,709.5 (38.3 ) 1,671.2 1,603.6 1.7 1,605.3 4 % Operating Expense
Margin 67.0 % 65.5 % 70.0 % 70.1 % Operating Income 341.6
38.5 380.1 245.1 (1.7 ) 243.4 56 % Operating Income Margin 13.4 %
14.9 % 10.7 % 10.6 % Provision for income taxes 115.6 0.0
115.6 53.6 (0.7 ) 52.9
Net Earnings Attributable to
The Estée Lauder Companies Inc.
213.2 38.5 251.7 178.8 (1.0 ) 177.8 42 %
Diluted net earnings attributable
to The Estée Lauder Companies
Inc. per common share
.54 .10 .64 .45 .00 .45 42 %
Nine Months Ended March 31,
2014
Nine Months Ended March 31,
2013
As
Reported
Returns/Charges
BeforeReturns/Charges
As
Reported
Returns/Charges
BeforeReturns/Charges
% Changeversus PriorYear
BeforeReturns/Charges
Net Sales $8,243.5 $ (0.1 ) $8,243.4 $7,774.3 $ 0.1
$7,774.4 6 % Cost of sales 1,624.4 (0.2 ) 1,624.2 1,550.3 (1.2 )
1,549.1 Gross Profit 6,619.1 0.1 6,619.2 6,224.0 1.3 6,225.3
6 % Gross Margin 80.3 % 80.3 % 80.1 % 80.1 % Operating
expenses 5,171.7 (36.1 ) 5,135.6 4,843.8 (12.0 ) 4,831.8 6 %
Operating Expense Margin 62.7 % 62.3 % 62.3 % 62.2 %
Operating Income 1,447.4 36.2 1,483.6 1,380.2 13.3 1,393.5 6 %
Operating Income Margin 17.6 % 18.0 % 17.8 % 17.9 %
Interest expense on debt
extinguishment
— — — 19.1 (19.1 ) — Provision for income taxes 458.5 (0.9)
457.6 414.5 11.3 425.8
Net Earnings Attributable to
The Estée Lauder Companies Inc.
946.4 37.1 983.5 925.8 21.1 946.9 4 %
Diluted net earnings attributable
to The Estée Lauder Companies
Inc. per common share
2.40 .09 2.50 2.35 .05 2.40 4 %
THE ESTÉE LAUDER COMPANIES INC.
As part of the Company’s Strategic Modernization Initiative, the
Company anticipates the continued migration of its operations to
SAP-based technologies, with the majority of its locations being
enabled through calendar 2014. As a result, the Company has
experienced, and may continue to experience, fluctuations in its
net sales and operating results resulting from accelerated orders
from certain of its retailers to provide adequate safety stock to
mitigate any potential short-term business interruption associated
with the SMI rollout. In particular, approximately $94 million of
accelerated orders were recorded as net sales in the fiscal 2013
second quarter that likely would have occurred in the fiscal 2013
third quarter.
This action created a favorable comparison between the fiscal
2014 and fiscal 2013 third quarters of approximately $94 million in
net sales and approximately $78 million in operating income, equal
to $.13 per diluted common share and impacted the Company’s
operating margin comparisons. The Company believes the presentation
of certain comparative information in the discussions of the
quarterly results in this release that exclude the impact of the
timing of these orders is useful in analyzing the net sales and
operating results of its business.
Reconciliation of Certain Consolidated
Statements of Earnings Accounts Before and AfterReturns and
Charges and Accelerated Orders Associated with the Company’s
Implementation of SAP(Unaudited; In millions, except per
share data and percentages)
Three Months Ended
March 31, 2014
Three Months Ended
March 31, 2013
AsReported
Returns/Charges
SAPAdjust-ments
BeforeCharges/SAP
AsReported
Returns/Charges
SAPAdjust-ments
BeforeCharges/SAP
% Changeversus PriorYear
BeforeCharges/SAP
Net Sales $2,549.8 $ 0.0 $ — $2,549.8 $2,291.8 $ 0.0 $ 94.3
$2,386.1 7% Cost of sales 498.7 (0.2
)
— 498.5 443.1 0.0 16.2 459.3 Gross Profit 2,051.1 0.2 —
2,051.3 1,848.7 0.0 78.1 1,926.8 6% Gross Margin 80.4 % 80.4 % 80.7
% 80.8
%
Operating expenses 1,709.5 (38.3
)
— 1,671.2 1,603.6 1.7 — 1,605.3 4% Operating Expense Margin 67.0 %
65.5 % 70.0 % 67.3
%
Operating Income 341.6 38.5 — 380.1 245.1 (1.7 ) 78.1 321.5
18% Operating Income Margin 13.4 % 14.9 % 10.7 % 13.5
%
Provision for income taxes 115.6 0.0 — 115.6 53.6 (0.7 )
25.0 77.9
Net Earnings Attributable to
The Estée Lauder
Companies Inc.
213.2 38.5 — 251.7 178.8 (1.0 ) 53.1 230.9 9%
Diluted net earnings
attributable to The Estée
Lauder Companies Inc. per
common share
.54 .10 — .64 .45 .00 .13 .59 10%
THE ESTÉE LAUDER COMPANIES INC.
Excluding the impact of the prior-year period shift in orders
associated with the Company’s implementation of SMI, the returns
and charges associated with restructuring activities and the
Venezuela remeasurement charge, net sales and operating results for
the three months ended March 31, 2014 would have
increased/(decreased) as follows:
(Unaudited)
Net Sales As Adjusted
ReportedBasis
Local Currency
OperatingResults
AsAdjusted
Product Category: Skin Care 7 % 7 % 9 %
Makeup 7 7 25 Fragrance 11 11 5 Hair Care 1 2 62 Other 26 27 100 +
Total 7 % 8 % 18 %
Region: The Americas 5 % 7 % 64 %
Europe, the Middle East & Africa 11 10 7 Asia/Pacific 2 6 (13 )
Total 7 % 8 % 18 %
THE ESTÉE LAUDER COMPANIES
INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited;
In millions)
March 312014
June 302013
March 312013
ASSETS Current Assets Cash and
cash equivalents $ 1,530.2 $ 1,495.7 $ 1,438.6 Accounts receivable,
net 1,399.0 1,171.7 1,361.9 Inventory and promotional merchandise,
net 1,215.4 1,113.9 989.3 Prepaid expenses and other current assets
547.2 515.9 496.4
Total Current Assets 4,691.8 4,297.2
4,286.2
Property, Plant and Equipment, net 1,434.9
1,350.7 1,296.0
Other Assets 1,519.3 1,497.3 1,512.9
Total Assets $ 7,646.0 $ 7,145.2 $ 7,095.1
LIABILITIES AND EQUITY Current Liabilities Current
debt $ 18.4 $ 18.3 $ 20.0 Accounts payable 512.5 481.7 388.2 Other
current liabilities 1,508.4 1,434.6 1,507.7
Total Current
Liabilities 2,039.3 1,934.6 1,915.9
Noncurrent
Liabilities Long-term debt 1,327.7 1,326.0 1,329.2 Other
noncurrent liabilities 596.6 582.7 643.2
Total Noncurrent
Liabilities 1,924.3 1,908.7 1,972.4
Total Equity
3,682.4 3,301.9 3,206.8
Total Liabilities and Equity $
7,646.0 $ 7,145.2 $ 7,095.1
SELECT CASH FLOW DATA(Unaudited;
In millions)
Nine Months EndedMarch
31
2014 2013 Cash Flows from Operating
Activities Net earnings $ 950.7 $ 927.9 Depreciation and
amortization 280.0 247.2 Deferred income taxes (33.7 ) (43.3 ) Loss
on Venezuela remeasurement 38.3 2.8 Other items 130.3 96.8 Changes
in operating assets and liabilities: Increase in accounts
receivable, net (226.7 ) (297.0 ) Increase in inventory and
promotional merchandise, net (87.4 ) (4.2 ) Increase in other
assets, net (65.1 ) (24.0 ) Increase in accounts payable and other
liabilities 183.0 28.0
Net cash flows provided by
operating activities $ 1,169.4 $ 934.2 Capital
expenditures $ 342.8 $ 305.5 Payments to acquire treasury stock
600.3 363.2 Dividends paid 225.2 349.3
The Estée Lauder Companies Inc.Investor
Relations:Dennis D’Andrea, 212-572-4384orMedia
Relations:Alexandra Trower, 212-572-4430
Entergy Louisiana (NYSE:ELC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Entergy Louisiana (NYSE:ELC)
Historical Stock Chart
From Jul 2023 to Jul 2024